What Happens to Your Health Savings Account Money When You Leave Your Job

Yes, your HSA money stays yours and rolls over automatically

The money in your Health Savings Account does not disappear when you leave your job, change jobs, or stop contributing to it. Unlike a flexible spending account (FSA), which has a "use it or lose it" rule, an HSA is yours to keep. The balance rolls over from year to year, and you can take it with you if you change employers or retire.

This rollover happens without any action on your part. Your HSA provider holds the account and the money stays in it unless you withdraw it or spend it on may have access to medical expenses. You own the account and the funds in it — your employer does not.

Key Takeaways

HSA balances roll over automatically each year and never expire, even if you stop contributing.
Your HSA stays with your current provider when you change jobs unless you move the money yourself.
You can transfer your HSA to a new provider if your new employer offers a different HSA plan.
You can withdraw HSA money at any time, but non-medical withdrawals are taxed as income plus a 20 percent penalty if you are under 65.
After age 65, you can withdraw HSA money for any reason without the penalty, though non-medical withdrawals are still taxed as income.

How your HSA stays with you when you change jobs

When you leave an employer, your HSA account does not close. The account is tied to you, not to your job. Your HSA provider continues to hold the account and the money in it, and you keep the same account number and balance.

You can continue to use the debit card or checks associated with your HSA to pay for may have access to medical expenses even after you leave the job. You can also continue to make your own contributions to the account if you have a high-deductible health plan (HDHP) through a spouse's employer, the ACA marketplace, or Medicare.

If your new employer offers an HSA through a different provider, you have a choice: keep your old HSA where it is, or move the money to the new one. You do not have to move it.

Moving your HSA to a new provider

If you want to consolidate your HSA with your new employer's plan, you can transfer the balance from your old HSA to the new one. This is called a trustee-to-trustee transfer, and it moves the money directly between providers without you touching it.

Contact your new HSA provider and ask them to initiate the transfer. You will need to give them the account number and contact information for your old provider. The transfer usually takes one to two weeks. No taxes or penalties explore to trustee-to-trustee transfers.

You can also leave your old HSA open and keep contributing to your new employer's HSA at the same time. Some people do this to keep their money spread across providers or to avoid closing an account with a low balance. There is no rule against having multiple HSAs as long as your total contributions across all accounts do not exceed the annual limit set by the IRS.

What happens if you stop contributing but keep the account

Your HSA balance does not expire or get forfeited if you stop making contributions. The money stays in the account indefinitely, earning interest or investment returns depending on how your provider invests it.

You can still use the balance to pay for may have access to medical expenses at any time in the future. You can also withdraw the money for non-medical reasons, though this triggers taxes and penalties if you are under 65.

Some people treat their HSA as a long-term savings account and let the balance grow over many years. Once you turn 65, you can withdraw money from your HSA for any reason without the 20 percent penalty — you will only owe income tax on non-medical withdrawals.

Withdrawing money from your HSA after you leave your job

You can withdraw money from your HSA at any time, whether you are still contributing or not. If you use the money to pay for a may have access to medical expense — such as copays, deductibles, prescriptions, dental work, or vision care — the withdrawal is tax-free.

If you withdraw money for a reason that is not a may have access to medical expense, you owe income tax on the amount withdrawn. If you are under 65, you also owe a 20 percent penalty on top of the income tax. If you are 65 or older, the penalty goes away, but you still owe income tax on non-medical withdrawals.

Your HSA provider will send you a Form 1099-SA at the end of the year showing all your withdrawals. You report this on your tax return.

Keeping track of your HSA after you leave

Once you leave your job, you become responsible for managing your HSA on your own. This means keeping receipts for any medical expenses you pay with HSA money, in case the IRS asks you to prove they were may have access to expenses.

You should also keep your contact information updated with your HSA provider so you receive statements and tax documents. If your provider goes out of business or you want to switch providers, you can request a trustee-to-trustee transfer to move your balance elsewhere.

Some HSA providers charge monthly maintenance fees or require a minimum balance. If your balance is very low and fees are eating into it, you may want to transfer the account to a provider with lower costs or no fees.

HSA rollovers and Medicare

Once you enroll in Medicare, you can no longer contribute to an HSA. However, the money already in your account stays there and you can continue to use it to pay for may have access to medical expenses, including Medicare premiums, copays, and deductibles.

After age 65, you can withdraw HSA money for any reason without the 20 percent penalty. Non-medical withdrawals are still subject to income tax, but the penalty disappears. This makes an HSA a useful supplemental savings account in retirement.

Frequently Asked Questions

Can I have two HSAs at the same time?

Yes, you can have multiple HSAs as long as you are covered by only one HDHP. However, your total contributions across all accounts cannot exceed the IRS annual limit. If you have two HSAs and contribute to both, you must track the combined total to avoid over-contributing and facing taxes and penalties.

What if I forgot to move my HSA when I changed jobs?

Your old HSA is still yours and the money is still there. You can move it to a new provider at any time using a trustee-to-trustee transfer. There is no important date for moving an HSA, so you can do it months or even years later if you want to consolidate accounts.

Do I lose my HSA if I switch to a non-HDHP plan?

You keep the account and the money in it, but you cannot make new contributions once you are no longer on an HDHP. You can still use the existing balance to pay for may have access to medical expenses at any time. Once you turn 65, you can withdraw the money for any reason without the penalty.

What counts as a may have access to medical expense for HSA withdrawals?

may have access to expenses include copays, coinsurance, deductibles, prescriptions, dental work, vision care, hearing aids, and many other medical costs. Over-the-counter medications are also covered if you have a prescription. The IRS publishes a full list of may have access to expenses on its website.

Can my HSA be inherited?

If you pass away, your HSA becomes part of your estate. A spouse who inherits the HSA can treat it as their own and continue using it. Non-spouse beneficiaries must withdraw the balance, and the amount is taxed as income to them.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.